May 18, 2023
Over the last decade, the popularity of podcasting has driven its success as both a venture for content creators and an interest for the everyday consumer. Larger networks continued to pick up popular shows with existing audiences and established revenue streams. The goal became to bolster rosters for shareholders and advertisers, and as a result, something in the ecosystem changed.
In its genesis, podcasting was about exploration, and independence, in essence: ideals that weren’t for sale. Today, those same networks that wanted to capitalize on a growing listener base are increasingly prioritizing return on investment from their advertisers. At what cost does this come? Independent creators, those who established the medium and are responsible for the now sprawling industry, are at risk of losing their ability to continue creating what they want to make the way they want to make it.
By next year, ad spending on podcasting will top $2 billion, and near $4 billion by 2025. Premium advertisers spend more dollars with major conglomerates, muddling the listening experience for users, and placing creators at the intersection of competing visions of what podcasting should be.
iHeart continues to top podcasting charts with near omnipresence, while Spotify has scaled back its offering from the formerly-independent Gimlet and Parcast. When asked about the decision-making process, a Spotify executive cited ad revenue as a factor, among others. At the same time, fewer podcasters started their own show in 2022 than the year prior, with a significant increase in those being hired by media companies. We’ve seen similar consolidation in radio and news media, which increased cultural polarization and precipitated a lack of local news sources. If the current conglomeration maintains course, the ability to develop content unfettered by a corporate vision becomes increasingly rare.
Environments that foster diversity in terms of background and point of view provide greater value to their audiences and sustain the health of the overall ecosystem. Creators, networks, and advertisers working in alignment on such a critical ideal build a distinct path from the major network model. In an era when businesses believe consumers highly trust them much more than they do, why not explore a more meaningful approach to advertising?
For the time being, podcasting remains a rich space with a variety of programs, voices, hosts, topics, and genres. Major networks prioritizing higher valuations in the long term threaten the sustainability of that richness. A similar course of events homogenized commercial radio, and will ultimately make it difficult for independent creators to continue their craft, limiting the nurturing of new talent and eventually limiting the options available for advertisers. The impact can trickle down to the production level, as budgets favor shows that are likely to be a hit and pull resources from the kinds of programming that originally helped develop the kind of programming that made podcasts so popular as a medium.
What the commercial network model gets wrong is that it prioritizes growth above all else. While necessary for the stability of programming, growth without impacting the creator’s freedom and work is possible. How these organizations measure performance dictates the kind of content they’re willing to support. The current structure inflates the influence ad return has on programming. Beyond that, when a production company or an individual signs with a major network, they often lose control of what advertising ends up on their shows, sacrificing their input for the network name and the brands they serve.
31 percent of Americans over the age of 13 have listened to a podcast in the last month. That kind of reach, which shows no sign of slowing, is what makes podcasting such a viable medium for advertisers to target. Considering the easy access to listeners, these networks have, considerations around scale and content distribution need to be kept top of mind. There is untapped potential in this industry, which hinges on maintaining its independent roots and pairing creators with like-minded brands.
A single podcast episode can connect advertisers with thousands of highly engaged listeners, allowing major networks to pull in the advertising dollars they do. However, if the network relies solely on automation, the human touch of thoughtful targeting and mindful ad placements goes away. When advertisers are not thoughtfully matched with the right listeners, listeners take notice, with 7 in 10 skipping through ads at least some of the time. Listeners engage with podcasts based on shared values, interests, and beliefs, and will circumvent irrelevant advertising. This isn’t to say this approach is wholly ineffective, but rather that data doesn’t provide the whole picture when it comes to the unique connection between creators and their audiences. Podcasting can be one of the most fruitful advertising channels, but the disconnect between creators and networks is prioritizing a numbers-based approach to content creation. To what end will these organizations calibrate and quantify imagination?
The direction of the industry depends on choices that prioritize creators and their listeners at the heart of every step. Consolidation is the result of shrewd business decisions that fail to account for the reason the space became so established in the first place. Diverse schools of thought and unique perspective fuel the kind of content that listeners want to engage with.
Advertisers and networks too focused on the bottom line fail to see an alternative path, one that empowers creators to maintain their independence and control. Allowing for suitable advertising that aligns with the creator’s visions of their shows builds better podcasts for everyone, especially the listener.